How Wal-Mart emerged as an unlikely voice for gay rights

AP CHICAGO (Reuters) - The chief executive of Wal-Mart Stores has emerged as an unlikely voice for gay rights after the Arkansas state governor heeded his call on Wednesday to reject a much-criticized bill.

But the decision by Doug McMillon to speak out against the "religious freedom" bill reflects more than a decade of evolving policy by the retailer on the issue of gay and lesbian rights, and follows a pattern of taking stands on some social issues when it makes business sense to do so.

"Every day, in our stores, we see firsthand the benefits diversity and inclusion have on our associates, customers and communities we serve," McMillon said in a statement on Tuesday asking for a veto of the bill. That was seen as a major factor behind the governor's decision on Wednesday to ask lawmakers in Wal-Mart's home state for revisions.

Wal-Mart's action comes against the backdrop of other major companies taking stands on developing political and social issues, with mixed results.

General Electric CEO Jeff Immelt on Wednesday joined a growing chorus of executives expressing concerns about a similar bill seen as possibly discriminatory against gays in Indiana.

Starbucks canceled a program in which baristas were invited to engage customers on conversations about race, making it a cautionary tale for companies looking to wade into potentially controversial issues.

Wal-Mart has been selective in the issues it tackles in the public domain.

For years it has resisted calls by labor groups to pay a "living wage" and its move in February to increase pay to at least $9 an hour was viewed by many analysts as driven by competition for workers in a tight labor market as much as social concerns. Advocates of the 'living wage' want $15 per hour.

One former Wal-Mart executive, who now consults for the company, saw parallels between McMillon's show of support for LGBT rights and a push a decade ago on sustainability under then chief executive Lee Scott.

Scott told people to find ways to use less energy and cut out waste but wanted new initiatives to be profitable, the former executive said. Ultimately, the stand on LGBT rights is about protecting the business, said the former executive, who declined to be quoted because of his continuing ties to Wal-Mart.

"We don't want boycotts here (in Arkansas) like in Indiana. But it was also the right thing to do for the associates culturally."

A majority of Americans has supported same-sex marriage for several years, although a substantial minority still oppose it, according to Gallup polls.

Allowing its home state to be seen as anti-gay could hinder Wal-Mart's ability to recruit executives as well as hurt its image generally, argued Deena Fidas, a director at the Human Rights Campaign, which rates companies on their policies towards lesbian, gay, bisexual and transgender staff.

"It comes down to the issue of economics here. No one wants the stain of discrimination on their headquarters state," she said. "In many ways their story is one of leading in some cases and in other cases following industry peers and the trends of the Fortune 500 broadly," Fidas said.

Wal-Mart has not always been seen as progressive on LGBT issues. Jim Walton, a director and founding family member, has contributed funds to the Arkansas Family Council, which supported the state's bill, public records show.

In 2007 a partnership with the National Gay & Lesbian Chamber of Commerce fizzled amid pressure on the retailer from the religious right.

But after moves in 2011 to add gender identity to its non-discrimination policy and the extension of benefits to same-sex partners in 2013, Wal-Mart scored 90 out of 100 in the HRC's latest Corporate Equality Index.